Healthcare Services Group, Inc. Reports Results for the Three and Six Months Ended June 30, 2008 and Declares Increased Second Quarter 2008 Cash Dividend

BENSALEM, PA--(Marketwire - July 15, 2008) - Healthcare Services Group, Inc. (NASDAQ: HCSG)
reported that revenues for the three months ended June 30, 2008 increased
4% to $147,918,000 compared to $142,907,000 for the same 2007 period. Net
income for the three months ended June 30, 2008 was $6,953,000 or $.16 per
basic and per diluted common share, compared to the 2007 second quarter
net income of $7,524,000 or $.18 per basic and $.17 per diluted common
share.

Revenues for the six months ended June 30, 2008 increased 4% to
$295,177,000 compared to $284,074,000 for the same 2007 period. Net income
for the six months ended June 30, 2008 was $13,810,000 or $.32 per basic
and $.31 per diluted common share compared to the 2007 six month period net
income of $14,974,000 or $.36 per basic and $.34 per diluted common share.

The Board of Directors has declared a second quarter 2008 regular quarterly
cash dividend of $.15 per common share, payable on August 8, 2008 to
shareholders of record at the close of business July 25, 2008. This
represents a 7% increase over the dividend declared for the 2008 first
quarter and a 36% increase over the 2007 same period payment. It is the
21st consecutive regular quarterly cash dividend payment, as well as the
20th consecutive increase since our initiation of regular quarterly cash
dividend payments in 2003.

The Company will host a conference call on July 16, 2008 at 8:30 AM Eastern
Time to discuss its results for the three and six month periods ended June
30, 2008. The call in number is 888-789-0150.

Cautionary Statement Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934 (the "Exchange Act"), as amended, are
not historical facts but rather based on current expectations, estimates
and projections about our business and industry, our beliefs and
assumptions. Words such as "believes," "anticipates," "plans," "expects,"
"will," "goal," and similar expressions are intended to identify
forward-looking statements. The inclusion of forward-looking statements
should not be regarded as a representation by us that any of our plans will
be achieved. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Such forward-looking information is also subject to
various risks and uncertainties. Such risks and uncertainties include, but
are not limited to, risks arising from our providing services exclusively
to the health care industry, primarily providers of long-term care; credit
and collection risks associated with this industry; one client accounting
for approximately 15% of revenues in the six month period ended June 30,
2008; risks associated with our acquisition of Summit Services Group, Inc.;
our claims experience related to workers' compensation and general
liability insurance; the effects of changes in, or interpretations of laws
and regulations governing the industry, including state and local
regulations pertaining to the taxability of our services; and the risk
factors described in our Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 2007, including Part I thereof
under "Government Regulation of Clients," "Competition" and "Service
Agreements/Collections," and under Part IA "Risk Factors." Many of our
clients'
revenues are highly contingent on Medicare and Medicaid reimbursement
funding rates, which Congress has affected through the enactment of a
number of major laws during the past decade. These laws have significantly
altered, or threatened to alter, overall government reimbursement funding
rates and mechanisms. The overall effect of these laws and trends in the
long-term care industry have affected and could adversely affect the
liquidity of our clients, resulting in their inability to make payments to
us on agreed upon payment terms. These factors, in addition to delays in
payments from clients, have resulted in, and could continue to result in,
significant additional bad debts in the near future. Additionally, our
operating results would be adversely affected if unexpected increases in
the costs of labor and labor related costs, materials, supplies and
equipment used in performing services could not be passed on to our
clients.

In addition, we believe that to improve our financial performance we must
continue to obtain service agreements with new clients, provide new
services to existing clients, achieve modest price increases on current
service agreements with existing clients and maintain internal cost
reduction strategies at our various operational levels. Furthermore, we
believe that our ability to sustain the internal development of managerial
personnel is an important factor impacting future operating results and
successfully executing projected growth strategies.

Healthcare Services Group, Inc. is the largest national provider of
professional housekeeping, laundry and food services to long-term care and
related facilities.